An investigation by Republican staff members of the Senate’s Committee on Homeland Security and Governmental Affairs has shown that China is plotting to plant spies inside the Fed.
A shocking new piece published this morning in the Wall Street Journal claims that over the course of a decade, China attempted to embed “a network of informants inside the Federal Reserve system.”
According to an investigation by Republican staff members of the Senate’s Committee on Homeland Security and Governmental Affairs, over a ten-year period, Fed employees were given contracts with Chinese talent recruitment programs, frequently including cash payments, in exchange for information on the American economy and changes in interest rates.
As part of their efforts, the nation even threatened to detain a Fed economist who was traveling to Shanghai. According to the article, the economist was jailed in 2019. Although we’re unsure, WSJ writes that it is unclear whether any “sensitive information was compromised” though we’re not sure exactly how “sensitive” Fed information is to begin with.
According to the probe, it was “a sustained effort by China, over more than a decade, to gain influence over the Federal Reserve and a failure by the Federal Reserve to combat this threat effectively.”
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In response to the report’s conclusions, Fed Chair Jerome Powell said: “Because we understand that some actors aim to exploit any vulnerabilities, our processes, controls, and technology are robust and updated regularly. We respectfully reject any suggestions to the contrary .”
“We take seriously any violations of these robust information security policies,” he continued, according to the report.
13 people were deemed to be of interest in an earlier Fed inquiry, which began in 2015. The Fed’s conclusions were “heavily” cited in the Congressional investigation’s final report. One economist in the Fed system who was terminated for breaking the rules was discovered to be close with a previous worker who was accused of trying to recruit people for the spy network.
The former has connections to talent recruitment initiatives supported by the Chinese government and “expressed a desire to maintain an inside information sharing relationship.”
The report claims that another person once “gave economic modeling code to a Chinese university with ties to the People’s Bank of China.” Although the Fed consistently makes mistakes, perhaps our disinformation effort was to blame?
According to the Journal, yet another employee “attempted to transfer large volumes of data from the Fed to an external site on at least two occasions.”
Jerome Powell, the committee’s top Republican, wrote a letter to Sen. Rob Portman of Ohio in which he stated that he would be concerned about “any supportable allegation of wrongdoing, whatever the source,” but added that he was more troubled by the report’s “unfair, unsubstantiated, and unverified insinuations about particular staff members.”
In his response, Portman expressed his hope that the probe “wakes the Fed to the broad threat from China to our monetary policy.”
He wrote, “The risk is clear.